NEWS: The end of the kei car era?

For Japan’s largest automakers, the kei car has outlived its usefulness. The government is aware of this and is ratcheting up taxes on the uniquely Japanese microcars to make their cost of ownership more on par with regular passenger cars. The move could signal the end of the kei car era as we know it.

According to the New York Times, as the automaking business gets more global, there’s growing concern among Japanese marques that pouring R&D into a car that can’t be sold in other countries is a waste of money and manpower. Shared platforms are on the rise, single-use ones are not.

Kei cars emerged during Japan’s post-war recovery as a class of “people’s cars” limited to 360cc and strict dimensions in length, width and height. In exchange for buying a smaller car, owners got significant tax breaks. It was an effort to promote car culture and kick start the Japanese auto industry, and it worked.

But now, 60 years later, what was once a boon to automakers has become a burden. Keis make up a whopping 40 percent of all new car sales in Japan, and their dominant market share is actually hurting car culture now. Many young buyers it Japan’s sprawling metropolises are downsizing from regular cars to far more affordable keis.

In April, the government raised the light vehicle tax, which kei cars are subjected to, by 50 percent, severely narrowing the cost gap between kei and traditional car ownership. Many lower income drivers are furious about the change, but the government is looking at a healthy bump in tax revenue. Companies like Suzuki, whose lineups consist mostly of keis, might even face extinction.

Sadly, one of the casualties of the new rules just might be a new wave of enthusiast kei cars. Honda is reviving the famous “S” moniker in a mid-engined roadster reminiscent of the 1991 Beat. The S660 was greenlit for production just last month, and would be the only sporty model in Honda’s once-prolific portfolio. Toyota’s kei specialist division Daihatsu is also set to re-introduce the Copen later this year.

With the cost advantage of kei ownership gone, hope for a 90s-like Cambrian explosion of innovate and grin-inducing sportsters has been all but squashed. Even worse, it’s likely that any poor sales of Honda and Daihatsu’s new roadsters will “prove” that there’s no business case for sports cars.

20 Responses to NEWS: The end of the kei car era?

Mike McDonaldsaid:

And, being 360cc they were considered in the motorcycle class and could be parked overnight on the street eliminating the requirement to prove possession or permision to use an off street parking spot before registration could be done.

Kei are 660cc, and parking one on the street will get a ticket as sure as anything else. Needing to demonstrate the holding of a valid parking certificate however, is indeed not necessary. You still need to park legally, just do need to go through the routine of having the police visit your house with a tape-measure… Neko.

Oh no! What will Suzuki do?! (Oh forgot they also make bikes…) Thing is though, aside from tax benefits there’s also the size benefit for kei cars on the narrow urban streets in Japan. I’m thinking/hoping there’ll still be a market domestically for cars of that size, just with much less tax benefits but also less restriction on engine size. This is certainly a legacy coming to an end, but there’s been hoards of interesting kei cars over the years for us to love for years to come. Just too bad about the new Copen and S-car. I also adore the new Suzuki Hustler, hate to see that come to a premature end.

I think Keis will still proliferate, there are plenty of homes that fit a kei, but not a regular car, and in cities which don’t have plenty of parking, keis will slot into places that normal cars won’t.

The size difference between a Kei and say, the Honda Fit is not as drastic as one might think. It may just lead to B-class cars becoming even more dominant.

It may kill the S660, but didn’t Honda announce that there was supposed to be a middle car between the S660 and new NSX? That may survive, or the rumoursed slightly upsized S1000 might become the reality…

I don’t think it will be the end of the kei class. Their popularity was only increasing – prior to the tax. Since many people have been buying them for their size advantages, that demographic will probably continue to buy them. Those who were buying them for their tax advantage might move up to the next size.

Personally, I don’t understand the idea behind discouraging kei class sales. What is the point of globalizing car platforms, other than to save money? GM has been famous for building many cars on one shared platform (hence the nickname “Generic Motors”). But those cars didn’t sell in Japan, did they? Will a company save money if people stop buying their cars? I say build to your market. If 40% or more of Japanese prefer kei class vehicles, that’s what you sell them. You want to sell bigger cars? That’s what North America and Europe are for.

I think what we’ll see is a permanent downturn in new car sales, market-wide. People will either hang on to their cars longer, or buy used cars. And if they buy used cars, that will affect those prices, and that in turn may affect those of us who like to buy JDM-JNC’s and import them to our countries.

40%? Did their market share slip, as a few years ago it was announced kei made up over 50% of registrations in Japan? While the NYT makes a moderate case, the Japanese market simply needs a vehicle in this class. The change in fee structure may impact the registration regime, it will most certainly not influence the need for vehicles of the size, capacity, and functionality of the kei.

Taking the NYT view though, globalization may indeed drive common platform – with capacity variations. As alluded to me by the head of the S660 design team – 660cc for local markets, and 990cc for international. Notably as the market for smaller capacity vehicles is growing globally as well? I assume so anyway…

There will always be vehicles of this type in Japan, however the color of their license plates may indeed change… Neko.

Japanese should give significant tax breaks to rotaries and engines of 2500cc or great in cars weighing 1500kg or less. That is, so long as they are going to continue to stomp their heavy regulatory boots all over the faces of one of the most car loving civilizations on the planet. One can only imagine the cartopia Japan would be if their population were allowed to do their car thang without wasting so much of their money on excessive government fees and hoop jumpings. Maybe instead of all the kids moving to “cool” Tokyo and not liking cars anymore, all the “rural” prefectures would be thriving hotbeds of automotive innovation where the next generation of Japanese grow up liking cars even more than their parents…

My mother in law still won’t do it herself though, but I’m gaijin with limited English and I’ve done my cars twice and I’ll do my Toyota Sienta again this September. So, if you do it yourself, shakken is fast and far cheaper than relying on a shop to do it.

Okay, so they’ll make the cars effectively more expensive, reducing the number of buyers of a product that’s obviously popular, AND that get – from what I’ve converted to U.S.mpg – in the 50s+. I consider Japan to be a really “green” country, automotively, at least, so to make the mega-mpg cars less attractive seems to work against their own ideals, as well.

Would love to see Keis here, even if they were restricted to non-highway use. I know I can get from Pgh to Ohio or W VA without touching an interstate, so that would seriously work for me.

If they’re not in Italy, and other old European cities, they should be; would be great on those tiny, little streets. Would be good around my ‘hood, too – a 200-year-old city has lots of smaller streets.

Maybe Japan recently elected people who are as dumb as U.S. bureaucrats? Is the country as broke as we are, and somebody thinks that making things more expensive is a good strategy?